Iron ore mines cost incurred pre and post MMDR Amendment Act, 2015

Published: 28 June 2021| Version 1 | DOI: 10.17632/cyj3r2yhrw.1
Contributor:
Richa Patro

Description

As per the Ministry of Mines and other data sources such as FICCI, FIMI, it can be observed that while prior to the Act, in terms of mineral-related payments, an iron-ore mine was paying 15% of sale price to the Government, now old mines are paying 19.8% of sale price (Mine A), and auctioned mines have to pay in the range of 53.50% - 291.80% of sale price (Mine B & C) to the Government. Even with the modest bid of 36.70% in case of iron-ore, a mine has to pay at least share 53.50% of its revenue to the Government, apart from other taxes and levies (NPV) and its own cost of production. Adding the cost of production and all non-mining taxes/levies have resulted in a situation where many of the mineral deposits may become unviable to mine. Since new mining leases can now be granted only through auction (Ministry of Mines, 2015) (as per MMDR Act, 2015), the financial burden on the domestic mining industry is bound to increase significantly, thus increasing the raw material cost of downstream industries and reducing the international competitiveness of Indian minerals/ores as well as finished products.

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